Property and SMSFs

Is property investment right for your SMSF?

For SMSF trustees, investing in property can be a smart way to increase the value of retirement savings and provide tax effective investment returns. But there are specific rules and regulations that must be considered before deciding whether to purchase a property through your SMSF. Owning an investment property as part of your SMSF can provide a number of benefits including:

tax advantages

potential growth

diversification

These potential benefits need to be weighed up alongside the risks of owning an investment property as part of your SMSF, including liquidity risk, legislative risk and interest rate risk, in addition to property ownership reducing the diversity of your SMSF investments, which may expose you to increased property market risk. Our SMSF investment advisor's can discuss the investment considerations of purchasing an investment property as part of your SMSF and may be able to provide alternative options to give your exposure to property assets in your SMSF.

What you need to know about SMSF property investment ?

Further to the key considerations for property investing there are particular costs and risks you need to be aware of when using an SMSF to gear into property including:

being potentially more costly than other property loans

maintaining sufficient liquidity or cash in the SMSF to make loan repayments

complexity of loan documentation and contracts, where, if not set up correctly, unwinding the arrangement may not be allowed and the property may have to be sold at an unfavourable time

not being able to offset any tax losses from the property against personal taxable income outside of the SMSF

limitations to alter and improve the property until the loan is repaid.

Investment properties held by an SMSF are also governed by specific ownership and usage regulations. These rules include that:

the property must be used solely for providing retirement benefits to members

members cannot live in the property

members cannot lease the property themselves or to a family member

the property cannot be purchased by a related party of a member.

However, an SMSF may purchase business premises and allow the member/s to pay rent as there are limited recourse borrowing arrangements that SMSFs can use, but strict conditions must be adhered to. Blue Chip Financial can discuss the rules associated with SMSF property investment with you.

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The information contained on this website has been provided as general
advice only. The contents have been prepared without taking account of
your objectives, financial situation or needs. You should, before you
make any decision regarding any information, strategies or products
mentioned on this website, consult your own financial advisor to
consider whether that is appropriate having regard to your own
objectives, financial situation and needs.

Disclaimer:

Whilst Blue Chip Financial is of the view the contents of this website
is based on information which is believed to be reliable, its accuracy
and completeness are not guaranteed and no warranty of accuracy or
reliability is given or implied and no responsibility for any loss or
damage arising in any way for any representation, act or omission is
accepted by Blue Chip Financial or GPS Wealth Ltd or any oﬃcer, agent
or employee of Blue Chip Financial or GPS Wealth Ltd.

General Advice Warning:

The information contained on this website has been provided as general
advice only. The contents have been prepared without taking account of
your objectives, financial situation or needs. You should, before you
make any decision regarding any information, strategies or products
mentioned on this website, consult your own financial advisor to
consider whether that is appropriate having regard to your own
objectives, financial situation and needs.

Disclaimer:

Whilst Blue Chip Financial is of the view the contents of this website
is based on information which is believed to be reliable, its accuracy
and completeness are not guaranteed and no warranty of accuracy or
reliability is given or implied and no responsibility for any loss or
damage arising in any way for any representation, act or omission is
accepted by Blue Chip Financial or GPS Wealth Ltd or any oﬃcer, agent
or employee of Blue Chip Financial or GPS Wealth Ltd.